12.5 C
Sunday, July 14, 2024
HomeCryptocurrencyThanks to Ethereum, 'altcoin' is no longer an insult

Thanks to Ethereum, ‘altcoin’ is no longer an insult


Related stories

Altcoin originally stood for “Bitcoin alternative” because, in the early stages of cryptocurrency development, every blockchain-based coin was considered a kind of Bitcoin (BTC) imitation. Cryptocurrencies back then were mainly used for payments, such as Litecoin (LTC), XRP (XRP), and Peercoin (PPC). Altcoin was used as a general term for cryptocurrencies other than Bitcoin.

That has changed since 2011. With the emergence of more than 20,000 cryptocurrencies, each tied to different types of crypto projects and tokens. We’ve also seen coin prowess spread across sectors of public chains, decentralized finance (DeFi), layer 2, decentralized autonomous organizations (DAOs), stablecoins, and more.

If “altcoin” refers to non-Bitcoin cryptocurrencies with the same characteristics as Bitcoin, this definition certainly no longer fits the 20,000.

The evolved definition of an altcoin is now much more precise, generally referring to an altcoin within a particular track. Altcoins are typically more advanced in technical features or ecosystem applications, but so far, no altcoin has come close to surpassing Bitcoin in consensus, ubiquity, or market capitalization.

So, all things considered, does Ether (ETH) still fit in this box?

The changing state of the Ethereum altcoin

Even Ethereum was first perceived as another Bitcoin contender in the eyes of investors when it first launched in 2015, so much so that Ether didn’t even make the top ten cryptocurrency that same year. At that stage, Ethereum would have absolutely fit the above description of what was considered an altcoin.

Shaking off this stigma is another story. Ethereum’s status as the preeminent altcoin arose from new developments both in the broader crypto ecosystem and in its own operational capabilities. Technologically speaking, Ethereum overtook Bitcoin to become the first public chain to support smart contracts, essentially catalyzing DeFi.

Related: Income Tax You Never Earned? It is possible after the Ethereum merger

Suffice to say that we have noticed that the decentralized application and community aspects of growing Ether have created a much more vibrant community. It is not only a coin but also an ecosystem platform. This growth has only been compounded since the initial coin offering (ICO) boom of 2017, the DeFi summer of 2020, and the launch of numerous public chains supporting the Ethereum Virtual Machine. By flexing its muscles in various applications, Ether has become a viable alternative to build legitimate consensus and community support.

Giving Ethereum the altcoin title in 2015 made sense, but its expansive applications and growth since then make that classification a bit restrictive. And, we haven’t even mentioned the merger yet.

the game changer

The Ethereum merger, a landmark transition from Ethereum’s consensus mechanism from proof-of-work to proof-of-stake, really only represented the first step in a six-part process. All the next steps are aimed at allowing Ethereum to “process 100,000 transactions per second.”

While the merger changed several things for the better, including a sharp drop in power consumption and increased security, investors were not expecting an immediate price hike. Instead, it simply laid the foundation for a larger infrastructure that could solve its problems for years to come.

We can also expect part of this infrastructure to include more revolutionary coins that emerge as market challenges to Ethereum and Bitcoin. Although ETH holders now have their sights set on a potential turnaround, in which the market value of ETH surpasses that of BTC, to truly kill the altcoin ranking once and for all, it does not mean that the doors are closed to other blockchain players. After all, cryptocurrency does not claim to be an oligopoly.

Related: Post-Fusion ETH has become obsolete

The dominance of some big players like Bitcoin and Ethereum in the blockchain arena should not deter the entrepreneurial spirit of other blockchain developers or alternative networks. It’s really not as simple as Bitcoin camp versus Ether camp. Networks like Polygon or Kusama already illustrate how community building and various blockchain applications are not just reserved for the bigwigs in the crypto space.

If Bitcoin’s position as the original cryptocurrency means that all other coins are eternally considered altcoins, then no amount of Ethereum enhancement, merged or otherwise, can change that. But if the title is simply a matter of semantics, then altcoins have a chance to prove that the name doesn’t matter. Removing the stigma associated with altcoins not only benefits Ether, but also the broader community of blockchain and cryptocurrency developers.

james wo founded served as CEO of Digital Finance Group in 2015, where he oversees $1 billion in digital assets. He was an early investor in companies like LedgerX, Coinlist, Circle, and 3iQ. He is also the founder and board member of the Licensed Matrix Exchange in the United Arab Emirates and has a master’s degree in applied statistics from Teachers College of Columbia University.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Latest stories


Please enter your comment!
Please enter your name here